Monday, June 13, 2011

"Look ahead" to May 2011's predicted yearly global semicon sales: Cowan LRA model

(This is a continuation of my coverage of the fortunes of the global semiconductor industry. I would like to acknowledge and thank Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, who has provided me the latest numbers.)

May 2011's "actual" global semiconductor sales is scheduled to be released by the WSTS, via its monthly HBR (Historical Billings Report), on or about Tuesday, July 5th.

In anticipatation of the upcoming May sales release by the WSTS, Cowan demonstrated an analysis capability of the Cowan LRA Model for forecasting worldwide semiconductor sales; namely, the ability to provide a "look ahead" scenario analysis for 2011's global semi sales forecast range as a function of next month's (in this case May's) "actual" global semiconductor sales estimate.

The detailed results of the "look ahead" analysis are summarized in the scenario analysis matrix provided in the table below. These results are also discussed in the subsequent paragraphs:Source: Cowan LRA model.

In order to demonstrate this "look ahead" forecast capability, an extended range in possible May 2011's "actual" sales is selected a-priori; in this particular scenario analysis, a May 2011 sales range (from $23.065 billion to $26.065 billion, in increments of $0.25 billion, was chosen) as listed in the first column of the above table.

This estimated range in possible "actual" April sales numbers is "centered around" the projected May sales forecast estimate of $24.565 billion as gleamed from last month's Cowan LRA Model run (based upon April's published "actual" sales numbers). The corresponding May 3MMA sales forecast estimate is projected to be $25.474 billion (NOTE - assumes no, or minor. revisions in either March's or April's previously published "actual" sales numbers released last month by the WSTS).

The overall year 2011 sales forecast estimate for each of the assumed May sales over the pre-selected range of 'actual' sales estimates is calculated by the model, and is shown in the second column of the table. The third column reveals the associated year-on-year sales growth estimates compared to year 2010's actual sales result of $298.315 billion.

The fourth and fifth columns show the corresponding May 3MMA, three Month Moving Average, sales estimates and the corresponding yr-o-yr sales growths relative to May 2010's 3MMA sales of $24.701 billion, respectively. Finally, the sixth column lists the model's Momentum Indicator, MI, defined as the percentage delta between the actual May sales result and the previous month's sales projection for May.

Therefore, as the above scenario analysis table lays out, depending on the actual WSTS (to-be-released) May 2011 global semi sales number, the forecasted 2011 sales estimate, as determined by the model, could vary between a low of $317.947 billion and a high of $325.778 billion. The corresponding 2010 to 2011 sales growth forecast estimate would then vary between 6.6 percent and 9.2 percent, respectively.

Note: Last month's previously published Cowan LRA Model's 2011 sales growth forecast estimate, which was based upon April 2011's 'actual' sales (of $23.519 billion), came in at (plus) 8 percent based upon the model's 2011 sales forecast estimate of $322.328 billion as shown in the table below:Sources: WSTS & Cowan LRA Forecasting Model (June 2011).

Consequently, using this analysis capability, the model generates a "sensitivity output" of the "expected" 2011 sales forecast estimate range (and yr-o-yr forecasted sales growth) as a function of the yet-to-be-announced (but assumed) May 2011 "actual" sales numbers. Therefore, using this scenario table, one can "select" a May sales number (in the pre-selected range shown) and immediately see what the model would anticipate for a year 2011 sales forecast estimate along with its corresponding sales growth expectation in advance of the actual (to-be-published) 'actual' May 2011's sales result.

Finally, stay tuned for the WSTS to publish (anticipated on or about July 5th, 2011) the May 2011 'actual' sales number. One can then easily ascertain the model's latest forecast outlook as abstracted (or extrapolated) from the provided scenario table even before I run the Cowan LRA forecasting model and subsequently publish the updated forecast numbers.

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